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Healthcare Common Procedure Coding System (HCPCS) codes are a set of health care procedure codes. Standardized code sets are necessary for Medicare and other health insurance providers to provide healthcare claims that are managed consistently and in an orderly manner. HCPCS was established in 1978 as a way to standardize identification of medical services, supplies and equipment.

HCPCS codes were developed to simplify medical billing. Standardized coding is necessary to ensure that claims processing proceeds in an organized and uniform way. HCPCS codes are used by both public and private health plans. Originally, use of the HCPCS codes was voluntary, but after Congress passed the Health Insurance Portability and Accountability Act (HIPAA) in 1996, requiring that the Center for Medicaid and Medicare Services (CMS) adopt standards for coding systems for reporting and billing health care transactions, CMS established HPCPS as the coding system that entities covered by HIPAA are to use.

Level 1 HCPCS codes are numeric and are based on the American Medical Association’s Current Procedural Terminology (CPT).

Level 2 codes are alphanumeric and primarily include non-physician services and supplies not covered by Level I codes. This coding system is also used as an official code set for outpatient hospital care, chemotherapy drugs, Medicaid, and other services.

A medical coder, as part of the laboratory billing process, works to abstract and assign the appropriate coding on medical claims. In order to accomplish this, the coder checks a variety of sources within the patient’s medical record (i.e. the transcription of the doctor’s notes, ordered laboratory tests, requested imaging studies and other sources) to verify the work that was done. Then the coder must assign CPT® codes, ICD-9 codes and HCPCS codes to both report the procedures that were performed and to provide the medical biller with the information necessary to process a claim for reimbursement by the appropriate insurance agency.

Changed Medicare Policy Adds to Regulatory Risk

CEO SUMMARY: When Medicare’s National Correct Coding Initiative (NCCI) manual took effect on January 1, 2012, it contained a significant change in how prostate biopsy claims are to be coded. This change was widely overlooked by the pathology profession and even dismissed entirely for its ambiguity and inconsistency with previously published guidance on the subject.

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